High Court Blocks State HMO Medical Negligence
Suits

June 21, 2004 (PLANSPONSOR.com) - The nation's high
court on Monday blocked an avenue for patients interested in
suing their HMO in state court for big damage awards if the
HMO wouldn't pay for recommended medical care.

U.S. Supreme Court justices ruled unanimously that
two Texas HMO patients can’t file malpractice or
negligence cases in a state court venue where trial
lawyers and patient rights advocates say plaintiffs are
more likely to win big jury awards, the Associated Press
reported.

For their part, insurers have argued that
plaintiffs are restricted to filing federal court suits
where such litigation can only produce awards equal to
the amount of the denied HMO benefits.

The justices based their decision on the Employee
Retirement Income Security Act (ERISA) which directs that
patients like those in the two Texas cases confine their
activities to the federal court system. In fact, insurers
had argued to the justices, ERISA trumps state patient
protection laws or other state statutes that allow
medical negligence suits in local courts.

In one of the two cases covered by Monday’s ruling,
the court ruled against a hysterectomy patient, Ruby
Calad, who had claimed that Cigna Healthcare of Texas
essentially evicted her from a Houston hospital after
only one day of recovery. The HMO would not pay for a
longer stay, even though her doctor recommended
it.She was back in the hospital a few days later,
suffering complications she claims could have been
avoided had she remained hospitalized longer after
surgery. She later went to court, seeking to make the HMO
pay a price for what she called negligent care, according
to court records.

In the Calad case and a companion one involving
post-polio patient Juan Davila, insurers tried to pull
their lawsuits out of state court and then sought to have
the suits thrown out in federal court. Davila took what
he claims was inferior but cheaper pain medication,
instead of the Vioxx his doctor had recommended, because
his Aetna Health plan would not pay for the more
expensive drug right away, according to court records.
The cheaper medication caused bleeding ulcers, and he
almost had a heart attack, Davila said.

Texas
and nine other states regulate HMOs, making decisions about
whether treatment is medically necessary, state attorneys
general backing Calad and Davila argued in a friend of the
court brief. Arizona, California, Georgia, Louisiana,
Maine, New Jersey, Oklahoma, Washington and West Virginia
have laws similar to Texas.

One employer benefits trade group applauded the
high court’s move Monday. “It is critical employers
feel confident that ordinary benefits decisions will not
subject them to the extreme costs associated with often
unlimited remedies under many state laws,” said James
Klein, president of the American Benefits Council in a
statement. “Furthermore, without this decision, employers
would have, in effect, lost the ability to design uniform
benefit plans covering all of their employees in any
state where they may reside, because each state court
would have been free to interpret differently a health
plan’s terms of coverage. This would lead to unacceptable
conflicting results.”

The cases are Aetna Health Inc. v. Davila, 02-1845
and Cigna Healthcare of Texas Inc. v. Calad, 03-83. A
copy of the ruling is
here
.